There’s unlikely to be an exodus of UK insurance jobs because of Solvency II

As the deadline for Solvency II looms, many have speculated on an exodus on insurance firms from Europe. Prudential has threatened to relocate from London to Hong Kong, and others could follow suit. However, insurance companies have one good reason for sticking around in the UK – their staff.

London is one of the primary hubs for insurance in the world, and companies are unlikely to desert their EC3 offices for cheaper locations, or as a direct response Solvency II, suggests a new report from DTZ Research.

If an insurance company is based outside of the EU, the more rigorous capital requirements of Solvency II only apply to their operations within Europe. For those companies headquartered in the EU, their entire global operations are subject to the regulation.

However, an exodus is unlikely.

One of the primary reasons for this is staff. Firstly, large hubs like London have a greater availability of specialist staff and this is attractive – as the recent transferral of HQ by Aon from Chicago to London demonstrated. Secondly, the cost-savings of relocating to a cheaper location are offset by the need to transfer, recruit or train staff in the new office, says the report.

The UK houses 25% of all insurance firms in Europe, or 1,300 companies, and employs over 100,000 people. They’re also productive.

As the chart below shows, the UK is way above the European average in terms of gross premiums written per employee (€1.8m) and this is likely to inspire more insurance firms here to recruit. By contrast, major insurance hubs like Germany, Luxembourg and Austria lag the average and DTZ suggests redundancies could be coming in these countries.